BP starts cementing Gulf oil well

BP started pumping cement on Thursday into its blown-out Gulf of Mexico well as it moved to permanently kill the source of the world's worst marine oil spill.

Engineers were piping cement down into the deep-sea Macondo well after earlier injections of heavy drilling mud this week had subdued the upward pressure of its oil and gas. The well was provisionally capped in mid-July.

The aim of the procedure is to assist with the strategy to kill and isolate the well ... This procedure will complement the upcoming relief well operation, BP said in a statement.

The so-called static kill from the top is due to be finished off later this month with a bottom kill of more mud and cement injected through a relief well that will intersect the well shaft. This is seen as the final solution to plug the oil reservoir 13,000 feet beneath the seabed.

Progress in shutting down the cause of an environmental disaster for the U.S. Gulf Coast is a relief for both BP, whose image and stock took a beating, and U.S. President Barack Obama, whose approval ratings also suffered over criticism of his administration's handling of the spill.

With the U.S. government announcing this week that some 75 percent of the estimated 4.9 million barrels of oil leaked by the well has either evaporated, dispersed or otherwise been contained, some environmental experts say the U.S. Gulf Coast may have dodged a nightmare scenario.

Reflecting hopes that an end to the 108-day-old drama is now in sight, BP shares hit two-month highs in early trading in London. They later fell back, trading up less than 1 percent.

We are pleased to see that BP appears to have stopped the oil leak and that a more thorough assessment of the damage done and remedies necessary can now be made. We would hope that the worst is indeed behind the company, one BP shareholder, who asked not to be named, told Reuters.

While there is still some uncertainty about the costs that BP faces to continue the clean up and potentially in damages, the disposal process that the company has begun is likely to show that BP has some very attractive assets. Over time, the value of the assets and the cash flows those assets produce, will drive the share price, the shareholder added.

BP has said it would sell about $30 billion in assets to cover costs related to the spill.

WHERE'S THE OIL GONE?

Despite the encouraging announcements from BP and the Obama administration, many Gulf Coast residents, who have seen their fishing and tourism livelihoods devastated by the spill, were wary, asking where the remnants of the leaked oil had gone.

Where is this remaining oil? It's in the reeds, salt marshes, mangroves and on the beaches or it's still at sea -- either floating on, in or near the surface, said Simon Rickaby, chairman of the London-based Institute of Marine Engineering, Science & Technology (IMarEST) Pollution and Salvage Special Interest Group.

This needs to be dealt with, he added. BP and U.S. authorities have said that cleanup efforts, though being scaled back, would continue.

But analysts believe the worst seems to be over for BP, whose stock at one stage lost more than $100 billion in market value. The shares have gained around 40 percent since hitting a 14-year low on June 25.

Nobody thinks they (BP) are going to go bust in the next five years any more, said Iain Armstrong, an analyst at Brewin Dolphin.

The stock is still off by a third from levels before the April 20 rig explosion and sinking that triggered the spill.

Eleven rig workers were killed and the oil pollution that ravaged the Gulf Coast and killed birds and sea creatures also cost the job of BP Chief Executive Tony Hayward, who was widely criticized as seeming insensitive to the disaster.

UNKNOWN LIABILITIES

Brewin's Armstrong said he expected analysts to lower their estimates for how much the spill would cost but added that investors needed to tread carefully.

Before you get too carried away yet, you've got a massive unknown set of liabilities, he said. The company, which faces an avalanche of economic damage lawsuits, has said it will pay all legitimate claims for as long as is necessary.

The financial implications for BP's continued clean-up efforts were not immediately clear. Government officials have said in the past that it would take years to fully repair the damage inflicted by the spilled oil, which seeped into ecologically sensitive wetlands and marshes.

More than 1 million barrels of oil remain in the Gulf, four times the 257,000 barrels that spilled into Alaska's Prince William Sound from the Exxon Valdez tanker in 1989.

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